Thailand Property Lawyer
Khun Sirichot "Beer" Chaiyachot joined Siam Legal in 2008, initially in our Litigation and Dispute Resolution Section. Involved in all aspects of the dispute resolution process, he assisted in the drafting of demand letters, the preparation of case files, submission of documentation to the court and support for our senior litigation lawyers.
During 2010, he took on a new challenge when he moved to our Property Section, advising clients and helping them navigate the sometimes complex landscape of transacting and acquiring real property in Thailand. Through his hard work, exceptional ability and experience, he has been instrumental in the development of our Property Section into one of the most trusted and diverse practices in Thailand, dealing with a range of clients from single private to large corporate developers. In recognition of this, he was made the head of our Property Section and a Senior Associate in 2015.
Khun Sirichot earned his Law degree at Naresuan University International College and was admitted to the Thailand Bar Association in 2011. He obtained his notary public license in 2012. Having grown up in a household that welcomed foreign exchange students from Norway and Switzerland, he is also fluent in English and fully conversant with western culture.
As a lawyer with a great deal of experience in the field, he is able to expertly guide clients through the often difficult and opaque landscape of Thai property law and is a well known figure at the various land offices, ministerial departments and other government offices he regularly attends during the course of his work. Khun Sirichot is highly knowledgeable in the mechanisms and practices of land transfer and ownership in Thailand, and skilful in the art of drafting a wide range of legal documents critical to this area of practice, including Sale and Purchase Agreements, Loan Agreements, Mortgage Agreements, Lease Agreements and Thai Wills.
Below are some of the questions frequently asked by foreigners who are looking to acquire land, houses, villas or condominium units. Khun Sirichot discusses some of the various options available to foreigners who are interested in buying real property in Thailand.
What are the restrictions on owning a land in Thailand?
A foreigner or a foreign juristic entity such as a company, foundation or an association of which the majority of shares are held by non-Thai persons is prohibited by Thai law to be an owner of land in Thailand.
What are the restrictions on buying a house or other construction on land?
According to the Thai Land Code, any foreign national, be it a company or individual, may own a house or construction built on land that belongs to a Thai national or on the land s/he leases from a Thai national. In practice, this is not always the case. In my experience, a significant number of authorities, e.g. land offices and Or Bor Tor or District Offices, refuse to allow a foreigner, either an individual or a company, to hold the ownership of the house in their jurisdiction, especially a foreign company. In this event, the claim is generally that this is a way to circumvent the law regarding foreign ownership on the land.
What are the ways for a foreigner to own land in Thailand?
While there is a restriction on land ownership in Thailand for foreigners, there are some ways for foreigners or foreign corporations to acquire property without circumventing Thai law. Each option has its corresponding opportunities, advantages and disadvantages. The outcome of each option may well vary on a case by case basis, depending upon the circumstances surrounding the foreign juristic entity. There are special laws that grant foreigners permission to own land in special cases. I will only provide general information for each option. Specific advice on any particular matter is context sensitive and should be discussed in advance with a Thai lawyer.
- Set Up a Thai company to buy the property and register the ownership of land
One option for a foreigner to own land and/or house(s) is setting up a setting up a Thai Limited Company. A foreigner can purchase a piece of land which will be owned by the Thai Limited Company, provided the majority of the company shares are Thai-owned. To be considered as a Thai national company and own land, the company needs to have at least 51% of its total shares held by Thai nationals and a greater number of Thai shareholders than foreign national shareholders.
In this scenario, a foreign owner may have both control of the company and freehold ownership of the land. This is a costly option as it entails a lot of expenses and papers to sign. The expenses and costs involved can be onerous and it can be burdensome over a long period of time because of annual taxes. Additionally, if the company is not going to engage in the conduct of actual business and is established with the sole aim of the purchase of property, this may be deemed as an attempt to circumvent the law regarding the restriction of foreigners purchasing land in Thailand. My advice is to only consider this route if a company conducting ongoing and legitimate business will hold the title of any land.
- Through Leasehold
As per the Thailand Civil and Commercial Code, a long term lease is another alternative legal option for foreigners to use, stay, occupy and utilize land for residential purposes for a certain period of time. One challenge with lease agreements is when termination of the tenancy happens, for example during a breach of contract, or when the lessee has to leave prior to the agreed date, or when the lessee has broken a specific rule that was mentioned in the agreement. In this case, the lease agreement can be terminated, and the lessee may not be able to collect his/her deposit or the remaining rent that he/she has paid the lessor in advance.
Another downside of this option is that the property lease agreement is terminated upon the death of the lessee because a lease right is an exclusive right given by the lessor to a specific lessee, and is thus a personal right. However, the lessor and the lessee can indicate in the agreement that the lease right can be inherited. Without a clear statement to this effect, the lease right cannot be inherited and is extinguished when the lessee passes away.
- A foreign person can own land if permitted by special law, such as BOI
A foreign juristic entity with substantial investments benefiting the Thai economy can buy land if it obtained investment promotion from the office of Board of Investments (BOI Thailand), provided the land is to be used for the promoted business and the company has more than 49% shares held by non-Thai national(s) or has more foreign national shareholders than Thai national. The total land area should be a maximum of 5 rai for offices and 10 rai for personal residences.
- By virtue of the Act on Industrial Estate Authority of Thailand
A foreign juristic entity will be entitled to own land if it operates its business within an estate or location of an Industrial Estate which must be approved and supervised by the Industrial Estate Authority of Thailand under Section 44 of the Industrial Estate Authority of Thailand Act. (See Foreign Ownership of Industrial Land.)
- By virtue of the Petroleum Act
A foreign juristic entity may have special privileges and exemptions for land ownership granted for the duration of their business in Thailand under Section 65 of the Petroleum Act if it receives concessions for oil and/or gas operation throughout the time of the concession period.
For leasehold, what is the maximum length of time under Thai law?
A long term lease will allow you to use, occupy and enjoy a property for a certain period of time. Thai law allows foreigners to lease real property in Thailand, such as land, for a maximum duration of 30 years. Leases may be extended for up to 60 years after the expiration of the original 30-year agreement, but common lease extension terms, often seen in Thai lease agreements (e.g. 30 + 30 + 30 years) are, in my view, likely unenforceable. In the event that the lessor/landlord does not voluntarily honor any clause regarding the renewal of the lease upon the expiration of the first lease term, the lessee will have no choice but to attempt to exercise his or her right in court. However, it cannot be said with any certainty that the judgment of the court at that point of time will be in favor of the lessee.
If the owners decide to sell the property, what are the property taxes and fees?
The total government fee is around 5 - 10% of the declared sale and purchase price or the government appraisal, depending on whichever is higher. The breakdown of the taxes are as follows:
Withholding tax of the Seller on a progressive rate approximately 1 - 4% of the government appraisal value;
Transfer fee at the rate of 2% of the government appraisal value;
Specific Business Tax at the rate of 3.3% of the declared sale and purchase price or the government appraisal value depending on whichever is higher. Specific Business Tax will apply only if the Seller has held the ownership of the property for less than five (5) years or having his/her name in the household registration (bluebook) for less than one (1) year;
Stamp duty at the rate of 0.5% of the declared sale and purchase price or the government appraisal value depending on whichever is higher. Stamp duty will apply only if the Seller has held the ownership of the property for more than five (5) years or having his/her name in the household registration (bluebook) for more than one (1) year; and
Some administrative fees.
The ownership and transfer of land, houses or condominium units must be registered at the Land Office upon the payment of transfer fees, taxes and stamp duty.
Siam Legal Property Services
Siam Legal International offers property legal services with offices within major provinces in Thailand. These include Bangkok, Chiang Mai, Pattaya, Samui, and Phuket. Our firm is staffed with foreign and Thai lawyers strategically assigned around Thailand. You can visit our head office at the 18th Floor, Two Pacific Place, Sukhumvit Road, Bangkok; or if you have any property questions or issues that need to be addressed, call us using the phone numbers below.